Labour law: Can Modi pull it off?

Whats needed is a give and take that is more than just giving higher compensation to retrenched employees

HUMAN FACTOR
SHYAMAL MAJUMDAR

ormer finance minister Yashwant

Sinha tried to do something spectacular in 2002 during the earlier
National Democratic Alliance regime.
He had proposed to amend the
Industrial Disputes (ID) Act by allowing factories with over 999 workers
(against the current 100) to lay off workers without government permission.
Predictably, the proposal remained on

paper in the face of deafening protests,

even though Sinha wasnt doing anything new.
Till 1975, the threshold actually was
1,000 workers. This was brought down
to 300 in 1976 and subsequently to 100
when Indira Gandhi came back to power in 1980.
It would be a pity if the Narendra
Modi governments move to bring the
number back to the 1976 level is lost in the
din of political one-upmanship in
Parliament. For Rahul Gandhi, it could be
a god-sent opportunity to beat the government with another stick. The job for
the government will indeed be a tough
one as trade unions have already termed
it an assault on workers fundamental
rights and giving employers the licence to
exploit at will. The concern of trade
unions is understandable as the minimum requirement for forming unions
at least 10 per cent of the workforce or 100
employees, instead of just seven employees now will defang them.

But Rahul Gandhi and his team

would do well to brush up their knowledge about the damage just one law has
done to the cause of employment generation in India. His late grandmother
had made it worse by making the provisions of the ID Act even more onerous.
The first lesson for Rahul Gandhi is
that of the 44 Central labour laws, only
four were enacted after 1990 and Indias
labour laws believe that all employers
are exploiters and that most employers
are big companies. Thats the mindset
responsible for the unwillingness of successive governments to take on a small
vocal minority, while millions of workers
languish in the informal sector.
This has resulted in almost static
manufacturing jobs growth, evident
from the fact that 100 per cent of net job
creation since 1991 has happened informally. And the straightjacket of job security has forced employers to look for
escape routes, such as contract hiring.
Data show a regular worker is paid

~30,000 and a contract worker just about

a fourth of that for the same kind of job.
Have employees been protected
because of the ID Act? The answer is an
obvious no. Since 1991, many industries
have shut shop but in many cases, no
labour retrenchment has taken place.
This was made possible by effecting closures in other ways. For example,
employers themselves have been found
to provoke violence or strikes and make
sure they shut down. For example, in
1982, some 250,000 workers in more
than 50 textile mills in Mumbai went
on strike, which technically continues
even today. But the mills have either
closed for good or moved out. Most of
the workers have lost their jobs.
Unlike many other areas, the Modi
government has had an excellent track
record on the labour front. It has amended the Apprentices Act, revamped the
labour inspector regime, gave employers and employees unique numbers,
and is moving to online compliance.

Modi and his labour minister need to

be complimented for attempting to go
beyond the low-hanging fruits and go
for the big one to clean up Indias forest
of labour laws. Its in Indias interest that
the plan to integrate three laws the ID
Act, the Trade Unions Act and the
Industrial Employment (Standing
Orders) Act into a single code for
industrial relations succeeds.
However, apart from effective floor
management in Parliament to see the
amendments go through, what is
required is a give and take that is more
than giving retrenched employees 45
days of wages for every completed year
of service. One way out would be to link
them to effective management of the
skill-deficit issue because expanding
manufacturing employment is the key.
Lets look at some hard facts. China
has 550,000 vocational institutions,
training eight million people a year.
India has about 6,000 such institutes,
training just about one million people
every year. There are other problems,
too, such as two-thirds of people pursuing vocational education are not
employed in the trade they were
trained for.
Modi has quite a job at hand.